Wednesday, 21 March 2012

Budget - A Little of Nothing for Everyone

Well, there we have it. The Budget of 2012 and, as a Liberal Democrat, I'm moderately pleased. Let's be clear - this is NOT the Budget a Chancellor in a majority Conservative Government would have delivered.

I think there's little doubt that George Osborne wants to bring the top level of tax down to 40p as a priority but this is a Coalition and he can't do that. He has had to haggle - an enlightening experience for us all. Between keeping the top tax rate at 50p and bringing it to 40p, between holding personal allowances at £8,000 and raising them to £10,000. In both these key areas, the Coalition has prevailed and the difference has been split. It's probable both Conservatives and Liberal Democrats will get what they want and maybe as early as next year. It will be worth the wait.

I was surprised to see the planned 3p fuel duty rise still on the table and I wouldn't be surprised to see that dropped as a pre-Olympic gift.

Some of the tax changes to pensioners need clarification though I appreciate Danny Alexander's point about the need to simplify the system for all. Already, the right-wingers in the blogosphere have started to mutter about going after public sector pensions and more cuts though it seems the privatisation of Royal Mail is set to yield a nice windfall.

Clearly, high fuel prices and ongoing problems in the Eurozone make forecasting an inexact science. I thought the prediction of 2.8% growth in 2013-14 interesting to say the least. It seems likely oil prices will be high for the immediate future and that suggests a drag on growth. I think that's over-optimistic and that carries the risk that the deficit reduction strategy will also be thrown off course.

The fact is the Government has to work with what it's got and there will be those disappointed at the absence of a truly big measure but in the end it's the little things that matter and there are plenty of those in this most Coalition of Budgets.

Whether it was a Budget Osborne enjoyed delivering I don't know but Nick Clegg and Danny Alexander looked pleased and there was a little for a lot of people to be happy about.

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